In just under two weeks, the United States government could shut down if Congress does not pass emergency legislation to raise the ‘debt ceiling’. To explain: the US has always had an upper limit on how much outstanding debt the government can accumulate, by law.

That figure is currently around $14 trillion and needs to be raised by 2nd August or the US govt shuts down and financial markets go into a tail-spin. This has happened before, during Bill Clinton’s Presidency.

Rather cleverly, President Obama has created a trap for Republicans and they seem to be falling straight into it. At this point, believe it or not, if the US economy shuts down – Obama benefits.
Here’s how.

The Republicans are ideologically opposed to raising taxes. In fact, most of them have signed a pledge that demands they don’t raise taxes overall. With pragmatic Republicans gone and largely replaced by highly ideological Tea-Party type Republicans – raising taxes is a strict no-no.

But Republicans also control the House of Representatives – which has to pass the bill before The Senate (controlled by Democrats) approves it or rejects it. Obama cannot pass any bill he likes – he can only pass a bill that Republicans first agree to.

So what do you in that situation?

Here is where I get frustrated with people like Glenn Greenwald – who accuse Obama of gutting social security by offering Republicans far too much.

As far as I can tell, the Obama game-plan is this: you make a highly generous offer to Republicans they simply won’t accept. He’s offering $3 trillion of cuts + $1 trillion of tax rises over 10 years. The Republicans are highly unlikely to accept this offer (even though its stacked in their favour) because they oppose the trillion-dollar tax rise, and big cuts to defence spending.

The problem for the Republicans is that polling shows most people think Obama is being much more reasonable than Republicans. So if a default happens – people will blame Republicans.

Republicans are hence caught in a bind: if they agree to increase taxes, they break their own pledges and annoy the hell out of their base. If they don’t – they lose independent voters.

I’m sick of this 13 dimensional chess Obama trickery. Voters don’t want Obama to win, they want a recovery, if the economy tanks as a result of these schinanigans then Obama will be punished in 2012. The Republicans aren’t makign life easy, but Obama seems to revel in this political brinkmanship as some sort of electoral asset, its more of a distraction.

Tyler, the Republicans are the last people to sort out America’s budget woes. They simply don’t care about the deficit, as year after .

I haven’t followed this enough to say whether Obama’s plan is ‘cunning’ or ‘falling backwards into the best answer’.

the debt ceiling is a left over relic from being on the gold standard. Holding to it is a very damaging belief now that we live in a fiat money system.

still ,if the teabaggers won this and kept the debt ceiling , i spose we would get an empircal test that would demonstrate much clearer than in the Eurozone why Austerity economics are a good/bad idea.

I suspect though that as we saw in the crash – rightwingers in positions of power dont believe in free markets,debt ceilings etc when push comes to shove they dont let the market rip.
The GOP will find a way out of this also.

“He’s offering $3 trillion of cuts + $1 trillion of tax rises over 10 years. The Republicans are highly unlikely to accept this offer (even though its stacked in their favour) because they oppose the trillion-dollar tax rise, and big cuts to defence spending.”

It’s a “tad” more complicated than that. The tax rises are real and now. The spending cuts are maybes somewhere down the line. Not quite the deal you make out.

But I’m never clear how things would actually turn out if Obama became the uncompromising progressive fighter everybody on the left seems to want him to be. How does that work with US process, US voters. Beats me.

But I’m never clear how things would actually turn out if Obama became the uncompromising progressive fighter everybody on the left seems to want him to be. How does that work with US process, US voters. Beats me.

Its the pre-emptive concessions that wind me up. Obama never sets out what best practice would be, then starts negotiating.

This trap is only smart so long as the Republicans all blunder into it, and then don’t turn round and start pointing out that whilst they were in good faith (no, I don’t really believe that either…) negotiating for the future of the economy, the President was playing politics.

I doubt that Mr Obama really wants to be labelled as more interested in political gain than sorting out problems, and by playing up the trap, you push that interpretation (that is, the irony may be that if Mr Obama plays politics really well here and is recognised for it, then he will be punished for playing politics).

“Tyler, you’re on Liberal Conspiracy, they’ve got something attacking republicans for opposing tax rises. Guy – you’re up on Labour List. Keep them pinned down there, they’ve been covering this Blue Labour immigration debate. Meanwhile, the rest of you are on Comment is Free. I know – but we need to flood the guardian with inane crap while they are on this phone hacking story.”

The US does need massive changes to get their finances on a sustainable trajectory. The debt ceiling limit is silly and dubious whether it is even constitutional. However, the Republican posturing is the usual hypocrisy. Reagan presided over 19 rises of the debt ceiling and Bush the W presided over 9. Those two are first and second in the league table for raising the debt ceiling. The last Republican president to sign a balanced budget was President Eisenhower in 1957. Their fake outrage over debt like all their other outrages only exists when a Democrat is in the White House.

I feel sorry for Boehner having to try and hold together that bunch of extremest ideological zealots. The heart of the Republican Party now resembles more an apocalyptic cult than a political party.

Sure, voters want that, but Republicans don’t want that. And they control Congress. So what could Obama have done otherwise?

The point isn’t about ‘trickery’ or ‘spin’ or whatever else people dismiss this stuff. The point is that you have to play the hand you’re dealt and Obama is dealing with the most obstructionist, ideologically driven Republican House for over a generation. What choices does he have?

The point isn’t about ‘trickery’ or ‘spin’ or whatever else people dismiss this stuff. The point is that you have to play the hand you’re dealt and Obama is dealing with the most obstructionist, ideologically driven Republican House for over a generation. What choices does he have?

Well, he could just point out the key flaw at the heart of the Republicans (with the results that others have publicised here, that they will not balance budgets) – they are a combination of special-interest groups determined to keep their funding with radicals determined to cut spending (albeit they will normally be satisfied with taxation). Whilst the Democrats are not really much better in terms of special-interest groups, they are (unlike say Labour here) better at keeping them away from the agenda. Problem is, they are far more prone to tax and spend, which is not exactly useful for the US (even if you want to argue it works anywhere). Just remember, our (rather outdated) left-right divide is hardly ideal for understanding US politics anyway.

Obama never sets out what best practice would be, then starts negotiating.

He did! He said he wanted a clean bill to raise the debt ceiling, without concessions on either side. But look at the polls – Obama is to the left of voters while Republicans vastly to the right

Well, he could just point out the key flaw at the heart of the Republicans

He has – repeatedly. He has attacked them repeatedly as the party that wants to protect subsidies for oil companies and tax breaks for corporate jets. This is why Republicans are losing public opinion.

It doesn’t matter whether a majority of Democrats/Republicans/Americans don’t want the debt ceiling raised. It has to be done. The debt needs to be raised to make payments that Congress has already authorised, not to allow new payments to be promised.

If it isn’t raised then that’s it, it’s great depression time and if that happens then it doesn’t matter whether it’s Obama’s fault or that of the children who make up the Republican party in Congress; economics are blamed on the incumbent president.

Fair or not, the most reliable variable for whether a president is re-elected is personal income growth. If that’s falling when the election happens then the president is a goner, even if it’s because of an economic depression brought about entirely by the other party.

There’s plenty – only one of the main presidential candidates is a nutjob remember – one even pioneered state medical care in his state. Don’t let your prejudices get in the way of politics; the Republican candidate will not be a Tea Party member, although may well give some concessions to them. They will probably not be a rabid ‘pro-lifer’ or something like that either – if they are, President Obama has a second term.

There are only two non-nutjobs who stand any chance of gaining the Republican nomination. Gulliani has no chance.

Huntsman is moderate but is hated by the primary voting base because he worked for Obama. Romney the Mormon is favourite to win but is not a born again. I suppose he could become a born again for the election. Perry who is second favourite is a fundamentalist Christian fruitcake.

Bachmann is nuts.

Palin is deranged. However, she would provide endless entertainment as she took stupidity to new levels.

Pawlenty changes his views every other day. Although, not to be left out he too is trying to pretend that he is fundamentalist crazy.

The rest do not matter.

What a state the Republican Party has got itself in when the only way to get the nomination is to be crazy or pretend to be crazy.

Have you actually observed any of the Republican primary race thus far?

They will get a fruitcake, or someone pretending to be one so fervently that they’ll have to at least act partly like a fruitcake in office.

Their base absolutely will not elect anyone else. They live in an extremist rage bubble. Deviation from orthodoxy is not something they tolerate. In this atmosphere, the idea a candidate would be nominated on a manifesto involving tolerating contraception, let alone abortion, is verging on the absurd. States controlled by them have been prosecuting women for having miscarriages. Seriously.

Which Overton window are you looking through which shows Guiliani as a moderate? He’s not a neo-con. He’s certainly not a moderate, look at his actual actions in office as Mayor of New York.

The policy shift at the RNC when Rove & co. took over left them dancing in the light of their burning moderates. If you spend 15 years pursuing an electoral policy of polarisation and destroying the middle ground in order to fire up your base, you end up with a political reality in which any heavy-weight moderates have been driven out by your rush to the right.

I’m also amused by the extent to which this whole issue is another instance of life imitating the West Wing…

The fucking Bush Administration should be in prison for the mess they put the government in. The entire Republican party should be permanently shut down. I think war crimes trials as well as financial irresponsibility trials are in order. NO MORE CONSERVATISM!